The other day I saw this article that add the following headline “Starting a business doesn’t make you an entrepreneur: study”. The piece made this claim as a summary to a study by two Swedish academics from an industrial economics research institute but quite frankly got the whole thing wrong.
What these two Swedish academics were really saying was that when the rate of self-employment in the country is high, the rate of billionaire entrepreneurs is lower. When they compared for correlation between the presence of billionaire entrepreneurs and the rate of self-employment in a country, they came to a surprising conclusion: countries with many successful entrepreneurs had lower rates of self-employment.
But this doesn’t mean that you are not an entrepreneur if you start a business. Surely, this is rubbish. It got me thinking about what is the definition of an entrepreneur. I like this one from Investopedia, “An individual who, rather than working as an employee, runs a small business and assumes all the risk and rewards of a given business venture, idea, or good or service offered for sale. The entrepreneur is commonly seen as a business leader and innovator of new ideas and business processes.”
What you think about this definition? Does it really get to what really makes an entrepreneur? Do you feel that what you are doing or plan to do fits in this definition of an entrepreneur?
I don’t think it’s very helpful to separate people into huge camps – the one being non-entrepreneurial and the other entrepreneurial. Some people while not being full-time entrepreneurs, show a lot of entrepreneurial behaviour. You also have the case where an entrepreneur may call themselves that but when you look at their business and the way they are going about it hardly looks or seems entrepreneurial.
Some people have even made lists of entrepreneur characteristics. While these characteristics can be helpful, not everyone applies to a so-called “entrepreneur”. It’s just like describing an albatross. You could come up with a whole list of characteristics about an albatross – that it is a bird with the largest wingspan of any birds, that it is an oceanic bird and that it travels in the air a lot. But does this really describe an albatross? Does this tell you what it does? An albatross opportunistically scans the ocean for food, which mainly comprises small fish, and hunts for its food by catching these fish in its beak when they are unaware.
The researchers into entrepreneur characteristics highlight things such as being a “visionary”, “starts more than one business”, “often bristles under authoritarian figures” and has a “high need for achievement (recognition). All of this sounds sensible. But doesn’t really tell you what an entrepreneur does? An entrepreneur identifies or finds an opportunity or problems in the market. I don’t know about you, but what I think stands out also is that an entrepreneur knows how to commercialise an opportunity. This is not some brainless activity but requires sophistication of thought because the entrepreneur has to use resources (skills, people, money, equipment) to make his or her opportunity a reality. But not only that; it also has to make money.
For me, when I look at the list of entrepreneur characteristics, the one that stands out is “highly creative”. Yes, it’s not the only characteristic that’s important but when you look at all the decisions that need to be made in identifying a viable opportunity and turning it into a business, there are many new ideas that are required and ways in which to make things work that requires generative or lateral thinking. In my book starting anything that makes money, makes you an entrepreneur. The reason: you’ve used your creativity to find a way to make money.